Health Management to amend 6 1/8%, 7 3/8% notes; remainder called

By Toni Weeks

San Luis Obispo, Calif., Jan. 24 - Health Management Associates, Inc. announced the early results for its tender offers for its $400 million outstanding principal amount of 6 1/8% senior notes due 2016 and $875 million outstanding principal amount of 7 3/8% senior notes due 2020.

By 5 p.m. ET on Jan. 23, the consent expiration, the company took in tenders for $370,288,000, or about 92.6%, of its 6 1/8% notes and $854,088,000, or roughly 97.6%, of its outstanding 7 3/8% notes, according to a press release.

The company is soliciting consents to eliminate substantially all of the covenants and default provisions. The requisite consents from the holders of both notes series were obtained, the release said, and the company intends to execute a supplemental indenture for each series. The amendments will become operative when a majority in aggregate principal amount of the applicable series has been purchased by the issuer, which is expected to occur on Jan. 27.

The total purchase price per $1,000 principal amount will be $1,118.13 for the 6 1/8% notes and $1,161.88 for the 7 3/8% notes. Those amounts include a consent payment of $30.00 per $1,000 principal amount of notes tendered by the consent date.

Those who tender after the consent deadline will receive the total purchase price less the consent payment.

Holders will also receive accrued interest up to but excluding the applicable settlement date.

The tender offers will end at 11:59 p.m. ET on Feb. 6.

Tendered notes and consents may no longer be withdrawn or revoked, respectively.

As previously reported, Health Management plans to merge with Community Health Systems, Inc., and the company plans to complete one or more debt financing transactions to fund the offers. Community Health priced $4 billion of notes on Jan. 15, according to Prospect News. Settlement of the offering is expected Friday.

The tender offers and consent solicitations are conditioned on the completion of the merger, which is expected to be close Jan. 27, the completion of the financing, availability of sufficient funds and the execution of supplemental indentures.

Upon closing of the merger, the issuer intends to call for redemption all notes that remain outstanding after the tender offers, the release stated.

The tender and information agent is D.F. King & Co. Inc. (800 290-6427). BofA Merrill Lynch (888 292-0070 and 980 387-3907 collect) and Credit Suisse (800 820-1653 and 212 538-2147) are the dealer managers and solicitation agents for the tender offers and consent solicitations.

Health Management is a Naples, Fla.-based operator of acute care hospitals.

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